Buy Blackberry Ltd (BB) Stock Amid Successful Software Transition

Self-Driving Cars Products

We have been making a strong cases for buying BlackBerry Ltd (NYSE:BB) stock for the last few months. The Canadian company proved our analysis true last month when it soared amid strong second quarter results. Blackberry’s technology solutions business revenue impressed Wall Street, rising 29% year-over-year. Blackberry’s enterprise software revenue also surged 11% quarter-over-quarter. This revenue jump clearly shows that the transition started by Blackberry CEO John Chen is on a right trajectory. The company is making big gains in the software segment.

Blackberry’s Opportunity in a New Market

Blackberry is also making headlines amid its trucking product, Blackberry Radar, showed strong growth in the second quarter. Trucking remains one of the biggest and profitable industries in the US and Canada. Blackberry Radar helps companies keep track of their trucking assets. John Chen said during the earnings call that Blackberry Radar collects 100 times more data than its competitors.

Chen also said that BlackBerry Ltd (NYSE:BB) expects just Blackberry Radar to earn about $100 million in revenue over the next three years. US trucking industry’s in the US is over $700 billion. With a trucking product, Blackberry has unlocked huge business potential.

Blackberry’s Internet Security Endeavors

Being a software company, BlackBerry Ltd (NYSE:BB) is also tapping into another lucrative and useful domain: internet security. The company’s solution to fight ransomware is gaining a lot of traction in the enterprise world. Companies around the world are being attacked by hackers and are forced to pay large amounts of money in ransomware. Blackberry’s solution will become popular in the enterprise world as more and more companies are ready to spend a fortune to secure their digital assets.

QNX: Blackberry’s Key to the Driverless Cars Market

We keep hearing all the good things about BlackBerry Ltd (NYSE:BB) QNX platform, which is the company’s key to profitability in the self-driving car and infotainment systems market. CEO John Chen said during the second quarter earnings call that QNX is now being deployed in Driver Assistance systems (read driverless cars) and for non-infotainment purposes at a faster rate than it is being deployed in infotainment systems. This shows that QNX has a bright future in the driverless cars market, whose value is expected to cross $550 billion by 2026, as more and more car companies race to launch efficient, safe and reliable driverless cars.

QNX is now being used in over 120 million cars.

Expectations Too High?

However, investors should keep in mind that BlackBerry Ltd (NYSE:BB) is a long-term play. The software transition, new projects and products will take a lot of time to pay off. After the blockbuster Q2 results, Morgan Stanley analyst James Faucette said in a report that Blackberry’s expectations for 2020 are “too high.” The analyst believes that Blackberry will have to deliver in its licensing revenue division. Otherwise its new business division will get a lot of burden of performance.

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Also Read: Blackberry Ltd (BB) Resurgence Makes It a Must-Buy Stock for 2018

Author does not have investment in stock discussed in this article.

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